WHO FCTC Secretariat’s Knowledge Hub on taxationhttps://untobaccocontrol.org/kh/taxation
Thu, 07 Feb 2019 10:36:45 +0000en-UShourly1https://wordpress.org/?v=5.0.3New Issue of the Newsletter on WHO FCTC Secretariat’s Knowledge Hubshttps://untobaccocontrol.org/kh/taxation/new-issue-newsletter-fctc-secretariats-knowledge-hubs/
Thu, 06 Dec 2018 08:37:34 +0000https://untobaccocontrol.org/kh/taxation/?p=986We would like to share with you the latest issue of the Newsletter presenting the work of the WHO FCTC Secretariat’s Knowledge Hubs, carried out from […]

]]>We would like to share with you the latest issue of the Newsletter presenting the work of the WHO FCTC Secretariat’s Knowledge Hubs, carried out from September to November 2018. The Secretariat encourages you to engage on the initiatives taking place in the coming future, which will gain from participation and contributions to any discussions, as well as to take advantage from the specific expertise of the diverse Knowledge Hubs. You can access the Newsletter here.

]]>FCA News Bulletin released today, featuring the work of the KH on taxation and illicit tradehttps://untobaccocontrol.org/kh/taxation/fca-news-bulletin-released-today-featuring-work-kh-taxation-illicit-trade/
Wed, 10 Oct 2018 13:53:55 +0000https://untobaccocontrol.org/kh/taxation/?p=923The 143rd issue of the Framework Convention Alliance Bulletin was released today, 10th of October 2018. The Bulletin provides a summary of work done by members […]

]]>The 143rd issue of the Framework Convention Alliance Bulletin was released today, 10th of October 2018. The Bulletin provides a summary of work done by members of the Knowledge Hub on Tobacco Taxation on “five reasons why codentify is not the solution to illicit trade in tobacco products.” The full Bulletin can be accessed through the following link: https://www.fctc.org/wp-content/uploads/2018/10/MOP-2018-Day-3_Wed_Oct-10_WEB-Final.pdf

]]>Blogpost: Is Eastern Europe a Smoker’s Paradise?https://untobaccocontrol.org/kh/taxation/blogpost-eastern-europe-smokers-paradise/
Wed, 12 Sep 2018 10:38:01 +0000https://untobaccocontrol.org/kh/taxation/?p=926By Hana Ross I recently attended three events in Eastern/Central Europe (Bulgaria, Poland and the Czech Republic) and concluded that this region of the world is […]

I recently attended three events in Eastern/Central Europe (Bulgaria, Poland and the Czech Republic) and concluded that this region of the world is still a smoker’s paradise.

First, each smoker has a lot of peers and fellow smokers, since smoking prevalence in Eastern/Central Europe is high. In Bulgaria, for example, 43.3% of males and 26.8% of females smoke cigarettes, while 27.4% of boys and 30.1% of girls age 13 – 15 currently use tobacco. In Poland, 32% of males and 19% of females are classified as current tobacco users.[1]

As a result, the social acceptability of smoking is high and smokers are not motivated to quit. In Bulgaria, for example, 78% of smokers have never tried to quit, as opposed to only 29% of smokers in the UK.[2]

Second, prices are low. In 2016, only four countries in the EU reported an average price of a cigarette pack of under 3 Euros, and all of them were in Eastern/Central Europe – Bulgaria (2,42 Euro), Lithuania (2.77 Euro), Latvia (2.89 Euro) and the Czech Republic (2.95 Euro).[3]The EU average price in that year was 4.41 Euro.[4]

Third, smoking is allowed in many public places and enforcement of existing restrictions is low.

In 2017, people reported the most exposure to smoking in bars in Greece (87% of respondent), Croatia (77% of respondents), and in the Czech Republic (73% of respondents). The EU average for exposure to smoking in bars was 20% that year.[5]I can attest to those statistics from walking around Sofia and seeing places with names like “Tobacco Café” and “Smoking Café”. Smokers in Sofia seem to have it easy. About 42% of bar visitors in Bulgaria reported being exposed to smoking[6]despite the country’s reporting the highest level of achievement in smoke-free legislation to WHO in 2017[7]. Obviously, enforcement is lagging behind. At the same time, policy makers in the Czech Republic are currently contemplating revoking the ban on smoking in public places that has been in place for about a year.[8]Why would any country want to go backwards?

Fourth, the industry has a strong influence on policy makers and policy. In Bulgaria, the industry has direct access to policymakers, which allows it to influence tobacco control legislature and tobacco taxes.[9]In Poland, the tobacco industry is a trusted a partner of the government in the preparation and implementation of legislation.[10]And the president of the Czech Republic, a smoker, publicly recommended (while visiting the production facility of Philip Morris) that people start smoking after the age of 27 since “smoking is without any risks after that age.”[11]

Sad to say, in that part of the world smokers might not be very motivated to quit, and young people are encouraged by their leaders to smoke. This is not a smoker’s paradise, this is the tobacco industry’s paradise.

Globally, countries face challenges to finance the ever-strained health budgets to meet challenges of preventing the growing prevalence of most non-communicable diseases (NCDs) (WHO, 2016; WHO, 2010). In low and middle-income countries (LMICs), the case is significant with nearly 80% of all NCDs deaths occurring in these countries (ibid). Of the 57 million deaths that occurred globally in 2008, almost two thirds were due to NCDs, comprising cardiovascular diseases, cancers, diabetes and chronic lung diseases.

The combined burden of these diseases is rising fast among lower income countries imposing large human, social and economic costs (WHO, 2010). Since the health risks of smoking became generally known, the world has seen a proliferation of anti-smoking campaigns and the institution of smoking-related policies, including increasing taxes on cigarettes. Over the years, increases in tobacco taxation are acknowledged to be one of the most effective tobacco control interventions (Vardavas, et. al., 2012).

Excise taxes on cigarettes, alcohol and other products have for a long time been a dependable and significant revenue source in many countries. More recently, considerable attention has been paid to the way in which these taxes may also be used to attain public health objectives while reducing consumption of products with adverse health and social impacts (Bird, 2015). Some countries have explicitly argued for the taxation of tobacco and other unhealthy products through well-designed and well-administered tax policy systems, and earmarking these excise taxes on harmful products to finance public health expenditures (WHO 2016). This is because increasing such taxes can be more politically acceptable if they can be used to provide the needed funding to increase government expenditures that can improve the lives of many people, especially the poor (Bird, 2015).

But to date, the debate on whether earmarking of tobacco tax revenues for health is the best way of handling sin taxes remains an issue. Whether earmarking of tobacco tax revenues can improve public health and service delivery in most LMICs continue to draw a considerable attention throughout literature. It is this part of literature that I am focusing on, by presenting international experiences with earmarking of tobacco and alcohol tax revenue for health while drawing lessons from earmarking countries on how to successfully earmark tobacco and tax revenues for health especially in LMICs.

]]>Blogpost: The predictability of cigarette consumptionhttps://untobaccocontrol.org/kh/taxation/predictability-cigarette-consumption/
Wed, 01 Aug 2018 09:24:52 +0000https://untobaccocontrol.org/kh/taxation/?p=888By Corne van Walbeek There is often a perception that academic research is divorced from policy. In many instances that is true, and it is […]

There is often a perception that academic research is divorced from policy. In many instances that is true, and it is unfortunate. Policy-oriented research that does not reach the eyes of policy makers is largely wasted. The challenge for researchers is to make the research accessible to policy makers. As researchers are typically not very good at promoting their work, it is fortunate that there are lobby or interest groups that specialise in this area. In the case of tobacco control, that role has traditionally been played by the National Council Against Smoking, and, more recently, also by the TAG Tobacco Alcohol and Gambling Advisory Advocacy and Action Group.

In 1996 I published a paper in the South African Journal of Economics, titled “Excise taxes on tobacco: How much scope does the government have?” I was a junior lecturer at the University of Stellenbosch at the time and the head of department expected me to do research and to publish, much as is the case today. I had no intention of specialising in the economics of tobacco control. I simply wanted to get a paper published and please the head of the department. My involvement in tobacco control research was not something that I had planned, but resulted from a fortuitous and somewhat random event.

In 1994 the Industrial Development Corporation published a book with time series data on price and output indices for 30 different industries. Back then, publicly available datasets were scarce. I thought that it would be interesting to estimate the price and income elasticities of demand for the products made by these 30 industries. It turned out that the data did not play along at all. For most industries the estimated elasticities were either of the wrong sign (i.e. positive price elasticities, suggesting a positively-sloped demand curve or negative income elasticities, suggesting that the product is inferior), or statistically insignificant. No journal would publish such results. For only one industry did the regression equations worked out beautifully: tobacco.

Both the estimated price elasticity (around -0.6) and the income elasticity were in line with economic theory. Based on these results I decided to focus my article around a topic that was very relevant at the time, namely, if the government were to increase the excise tax, what would be the likely consequences in terms of revenue generation and tobacco consumption? The Minister of Finance in the newly-elected democratic government under President Mandela had announced in June 1994 that he wished to increase the excise tax on tobacco products to 50% of the retail price, up from the 20% tax burden at that point.

In the paper I estimated that the government would maximise its revenue if it set the excise tax at 110% of the “producer” price. Together with VAT, that would have implied a total tax burden of 52% of the retail price. I estimated that, if the government were to set the excise tax at this level, the government could expect to (at least) double its tobacco excise revenues and that consumption would drop by between 41% and 46%. I also predicted that the real retail price would rise by between 44% and 122% from their 1989 levels.

The Minister of Finance announced the government’s plan a few months before I presented my initial results at an economics conference in November 1994. After the conference the National Council Against Smoking contacted me and asked for the report. I was told much later that they used the report to lobby the government to keep to its commitment of raising the excise tax.

In hindsight, it is possible to evaluate the accuracy of the predictions I made in the 1996 paper. I did not attach a time dimension to the analysis in the 1996 paper, but let’s look at what happened over the subsequent ten years. The government stuck to its 1994 commitment and substantially increased the total tax burden during the late 1990s and early 2000s.

It turns out that the predictions were quite accurate. Between 1994 and 2004 real government revenue increased by 140%, even more than the doubling that was predicted. Aggregate cigarette consumption decreased by 31% and per capita consumption decreased by 44%, exactly in line with predictions. The real retail price was 142% higher than in 1989, which was more than predicted (44% −122%), primarily because the tobacco industry was “overshifting” the tax increase, i.e. raising the retail price by more than the increase in the excise tax. This was something I had not foreseen when I did the analysis in 1994.

As forecasts go, the predictions that I published in the 1996 paper in the South African Journal of Economicswere reliable. But other than being a source of some pride, they illustrate a very important principle, namely that the demand for tobacco is highly predictable. While this was particularly true for South Africa, it has been found to be true in most countries where the demand for tobacco products has been estimated econometrically.

The implication is that an increase in the retail price, caused by an increase in the excise tax, will have predictable consequences for tobacco consumption and government revenue. In nearly all countries the price elasticity of demand for tobacco falls in the inelastic range. An increase in the excise tax increases the retail price, which decreases cigarette consumption, but also increases government revenue. Models like the WHO’s TaxSim and the Knowledge Hub’s TetSim, allow the likely consequences of such a tax change to be quantified.

One key aspect of excise tax modelling is that all other factors remain constant. For example, if consumers can switch to cheap, illicit cigarettes, in response to higher cigarette prices, it becomes difficult to make accurate predictions. This is why it is important that governments focus on all aspects of tobacco control at the same time. Since South Africa did not have an illicit trade problem in the 1990s and 2000s, I was able to accurately predict the consequences of a tax change. However, if the illicit market is growing, as it has been in South Africa in the past number of years, the relationship between cigarette consumption, taxes and prices break down, and the predictability of the tax changes is undermined.

]]>Message from the South African National Council Against Smoking: Make Your Voice Heard!https://untobaccocontrol.org/kh/taxation/message-south-african-national-council-smoking-make-voice-heard/
Mon, 16 Jul 2018 13:13:52 +0000https://untobaccocontrol.org/kh/taxation/?p=882Make your voice heard on the Draft Control of Tobacco Products and Electronic Delivery Systems Bill! We do not have much time. The comments period will end […]

The National Council Against Smoking would like to track the number of submissions that are sent to the NDOH so that we can continue to galvanise support for the Bill if the numbers of submissions are low. Can we ask you to please copy us at saverak@iafrica.com when you do send in your submission? Thank you so much.

Key improvements proposed in the Draft Bill

1. 100% smoke-free indoor public areas.

2. A ban on outdoor smoking in certain public areas, including in stadiums, beaches, hospital grounds and other public places.

3. The introduction of plain packaging of cigarettes with graphic health warnings and for this packaging to apply to all other devices used in connection with tobacco products such as e-cigarettes, water pipes and pipes. This means that all brands of cigarettes will be packaged in the same material and use the same font to indicate the name of the brand on the box.

4. The removal of all advertising at the point-of-sale of cigarettes.

5. A ban on smoking in any motor vehicle when a child under the age of 18 years is present and when there is more than one person present in that vehicle

6. The regulation of e-cigarettes in exactly the same way as combustible cigarettes, which means among other changes, that they will no longer be able to be advertised, and that health warnings on the packaging will be mandatory

7. A ban on smoking in any enclosed common areas of a multi-unit residence.
The Minister may prohibit smoking in any outdoor public place or workplace if they believe it would be in the public interest.

8. Stricter rules on the depiction of any tobacco products – including a ban on the sale of any confectionery or toy that resembles or is intended to represent a tobacco product.

9. Imprisonment or a fine depending on the severity of the offence. For example, those caught smoking in banned areas will receive a fine or prison time up to 3 months, while those found guilty of manufacturing or importing tobacco products which do not meet the new requirements and existing standards could face a fine and imprisonment of up to 10 years.

]]>Who can we trust and what can be done about illicit trade in tobacco products?https://untobaccocontrol.org/kh/taxation/can-trust-can-done-illicit-trade-tobacco-products/
Mon, 09 Jul 2018 09:12:32 +0000https://untobaccocontrol.org/kh/taxation/?p=878“The murky world of illicit trade is not terra incognita for the world’s biggest tobacco companies. Taking what they say on the issue at face value […]

]]>“The murky world of illicit trade is not terra incognita for the world’s biggest tobacco companies. Taking what they say on the issue at face value is a naive strategy,” writes Dr Hana Ross, Michael Eads and Savera Kalideenin an opinion piece published in The Daily Maverick. Click on the link here to access the full article.

]]>Mission Accomplished: the Protocol to Eliminate Illicit Trade in Tobacco Products is now a reality!https://untobaccocontrol.org/kh/taxation/mission-accomplished-protocol-eliminate-illicit-trade-tobacco-products-now-reality/
Thu, 28 Jun 2018 14:53:34 +0000https://untobaccocontrol.org/kh/taxation/?p=875The Secretariat of the WHO Framework Convention on Tobacco Control (WHO FCTC) is pleased to announce that with the ratification of United Kingdom of Great Britain […]

]]>The Secretariat of the WHO Framework Convention on Tobacco Control (WHO FCTC) is pleased to announce that with the ratification of United Kingdom of Great Britain and Northern Ireland the necessary number of Parties to the Protocol to Eliminate Illicit Trade in Tobacco Products (the Protocol) has been reached for its enter into force in 90 days.

This achievement is a milestone in the history of tobacco control, as the Protocol contains a full range of measures to combat illicit trade distributed in three categories: preventing illicit trade, promoting law enforcement and providing the legal basis for international cooperation.

Moreover, it aims to secure the supply chain of tobacco products, through licensing, due diligence and record keeping, and requires the establishment of a global tracking and tracing regime that will allow Governments to effectively follow up tobacco products from the point of production to the first point of sale. In order for it to be effective, the Protocol provides for intensive international cooperation including on information sharing, technical and law enforcement, cooperation, mutual legal and administrative assistance, and extradition.

Today’s fulfilment of the legal requirements for its entry into force, will allow the Parties to hold the First session of the Meeting of the Parties to the Protocol (MOP1) in Geneva, Switzerland, from 8 to 10 October 2018 following the Eight Conference of the Parties (COP8) of the WHO FCTC.

An electronic version of the Protocol and an overview page can be found on the WHO FCTC website, in the six UN languages, here.

The President of COP and Secretary, Ministry of Health and Family welfare, India, Ms. Preeti Sudan, has commended governments for their efforts in ensuring the new Protocol entered into force. “By joining the Protocol, our governments are sending a clear joint message that the illicit tobacco market will be targeted under the framework of international cooperation by cost-effective measures that will protect our children and socio-disadvantaged populations from being exposed to low cost and easily available tobacco products”.

WHO Director General, Dr Tedros Adhanom Ghebreyesus has celebrated that the conditions for the entering into force of the first Protocol have been attained today. He congratulated the new Parties to the Protocol for their commitment to public health through bold cross sectoral actions. The entering into force of the Protocol will send a clear message of the international community’s commitment to combating illicit trade in tobacco products worldwide. Its implementation will represent an important effort of the need for multilateral cooperation in order to solve international problems. The entering into force of the Protocol represents the first step in the path for the elimination of illicit trade of tobacco products worldwide.

Commenting on the accomplishment, Dr Vera Luiza da Costa e Silva, Head of the WHO FCTC Secretariat, said: “With the entering into force of the Protocol, we have made yet another step in our global efforts in tobacco control. To tackle illicit trade is to tackle accessibility and affordability of tobacco products, to be more effective on the control of the packaging and to reduce funding of transnational criminal activities whilst protecting the governmental revenues from tobacco taxation. I am very proud of this historical achievement and also to function as Secretariat to two legal instruments.”

]]>New research uncovers tobacco industry’s latest scamhttps://untobaccocontrol.org/kh/taxation/new-research-uncovers-tobacco-industrys-latest-scam/
Fri, 15 Jun 2018 00:08:47 +0000https://untobaccocontrol.org/kh/taxation/?p=871A study from the Tobacco Control Research Group at the University of Bath exposes evidence that big tobacco companies are still facilitating tobacco smuggling, while also […]

]]>A study from the Tobacco Control Research Group at the University of Bath exposes evidence that big tobacco companies are still facilitating tobacco smuggling, while also attempting to control a global system designed to prevent it.

The new research, which draws on leaked documents and investigates industry front groups, highlights the elaborate lengths the industry has gone to control a global track and trace system and to undermine a major international agreement – the Illicit Trade Protocol – designed to protect public health by stopping the tobacco industry from smuggling tobacco.

Authored by researchers at the University of Bath’s Tobacco Control Research Group, the paper, published today (Thursday 14 June) in the journal Tobacco Control, calls on governments and international bodies to crack down on Big Tobacco tactics and to instead ensure systems designed to control tobacco smuggling are free of industry influence.

In 2012, off the back of a string of inquiries, court cases and fines aiming to hold the major tobacco companies to account for their involvement in tobacco smuggling, governments around the world adopted the Illicit Trade Protocol (ITP). Part of a global treaty, the Framework Convention on Tobacco Control, the ITP aims to root out tobacco industry smuggling through an effective track and trace system – a system in which tobacco packs are marked so they can be tracked through their distribution route and, if found on the illicit market, can be traced back to see where they originated.

Fearful of developments, the new study argues that at this point the tobacco industry claimed to have changed, no longer the perpetrators of smuggling, but instead themselves the victims of counterfeit tobacco. Accordingly, instead of being held to account for smuggling, industry lobbied to work with governments to help tackle a ‘growing’ problem of counterfeit tobacco.

Yet, reveal the researchers, the tobacco industry is still facilitating tobacco smuggling. Approximately two thirds of smuggled cigarettes may still derive from industry; by contrast counterfeit cigarettes make up a far smaller proportion (circa 5% to 8% of the illegal cigarette market). At best, the authors suggest, this shows the tobacco industry’s failure to control its supply chain, but they point to growing evidence from government investigations, whistleblowers and leaked tobacco industry documents all suggesting ongoing industry involvement.

Simultaneously, the study authors highlight how the major tobacco companies have developed their own track and trace system, ‘Codentify’, lobbying governments around the world to see it adopted as the global track and trace system of choice. The study suggests that in order to bolster support for their system and enhance their credibility, Big Tobacco created front groups, paid for misleading data and reports and poured funding into organisations meant to hold it to account and into initiatives that would curry favour. These included:

· Big Tobacco funding (through a front group) the World Customs Organization’s conference on illicit or smuggled tobacco;
· Philip Morris International setting up a $100M fund for research on illicit which funds organisations whose previous reports on tobacco smuggling have already been widely criticised;
· PMI funding INTERPOL which, rather than promoting ‘Codentify’, should have been holding the industry to account.

Leaked documents show the four major transnational tobacco companies hatched a joint plan to use front groups and third parties to promote ‘Codentify’ to governments and have them believe it was independent of industry and how these plans were operationalised. For example, the study reveals how a supposedly independent company fronted for British American Tobacco (BAT) in a tender for a track and trace system in Kenya.

Professor Anna Gilmore, Director of the Tobacco Control Research Group, explains: “This has to be one of the tobacco industry’s greatest scams: not only are tobacco companies still involved in tobacco smuggling, but they are positioning themselves to control the very system governments around the world have designed to stop them from smuggling. Their elaborate and underhand effort, implemented over years, involves front groups, third parties, fake news and payments to the regulatory authorities meant to hold them to account.

“Governments, tax and customs authorities around the world appear to have been hoodwinked. It is vital that they wake up and realise how much is at stake. Our simple message is this: no government should implement a track and trace system linked in any shape or form to the tobacco manufacturers. Doing so could allow the tobacco industry’s involvement in smuggling to continue with impunity.”

Co-author Andy Rowell adds: “By analysing new leaked documents from the tobacco industry and other contemporary evidence, it’s clear that the masters of deception are up to their old tricks. The evidence suggests the industry is still facilitating tobacco smuggling, whilst trying to control the international system to stop smuggling. But authorities should not let the sly old tobacco fox look after the hen house.”

The team are now calling for a robust international track and trace system that is truly independent of the industry, and its front organisations. They suggest governments need to be alert to what the tobacco industry is doing and to realise it is now operating via a complex web of front groups and companies. They suggest any track and trace system linked to ‘Codentify’ should not be trusted.

NOTES

To access the peer-reviewed paper see http://tobaccocontrol.bmj.com/lookup/doi/10.1136/tobaccocontrol-2017-054191 .

This research was funded by Cancer Research UK/ Grant NumberC27260/A20488. Some documents used in the analysis were obtained through research funded by the New Venture Fund.

For further information from the Tobacco Control Research Group on Codentify, tobacco smuggling, and PMI Impact see:

]]>WNTD 2018: Tobacco and Heart Disease, UCT KH shares knowledge on the harms of tobacco use with the general publichttps://untobaccocontrol.org/kh/taxation/wntd-2018-tobacco-heart-disease-uct-kh-shares-knowledge-harms-tobacco-use-general-public/
Thu, 31 May 2018 07:32:58 +0000https://untobaccocontrol.org/kh/taxation/?p=868Tobacco and Heart Disease is the theme for today’s World No Tobacco Day. Although most people regard cancer as the disease commonly associated with tobacco use, […]

]]>Tobacco and Heart Disease is the theme for today’s World No Tobacco Day. Although most people regard cancer as the disease commonly associated with tobacco use, more smokers die of tobacco-attributable heart disease than tobacco-attributable cancers.

As our team celebrates WNTD2018, we share a newspaper article titled “How illicit trade undercuts efforts to curb smoking” by Corne van Walbeek of the UCT KH on tobacco tax and illicit trade. The article appeared in a local South African newspaper, Business Day. Business Day has a national readership. The full article can be accessed at the following link: